Coinbase Raises USDC APY to 6%
Several Coinbase users have reported a significant increase in the interest rate for holding USD Coin (USDC) on the platform, with rates rising to as high as 6% from the initial 2% over the past few months.
MV Capital CIO and partner Tom Dunleavy shared a Coinbase email screenshot indicating that the new 6% rate applies to the first $250,000 USDC, after which subsequent holdings would revert to a 5% interest rate. However, some users have pointed out disparities in the interest rates displayed on their dashboards, with rates ranging from as low as 0.58% to as high as 5% APY.
Dunleavy suggested that the differences may be related to the amounts held in Coinbase and highlighted the contrast between other staking pools, emphasizing that users can achieve much higher yields on-chain. Despite disparities, many users are content with the current yields in comparison to other staking pools due to the absence of certain risks.
Circulating Supply Is in Free Fall
The circulating supply of USDC has rapidly decreased over the past year to below 25 billion, marking its lowest level since 2021. In the last month alone, the supply has fallen by almost $1 billion to $24.39 billion. This trend began earlier this year when USDC faced challenges due to its exposure to the US banking crisis, specifically after Circle, the issuer, revealed that it held some USDC reserves at Silicon Valley Bank, which subsequently failed.
As a result, USDC temporarily depegged, dropping to as low as $0.87 before recovering. Despite improvements in market conditions, USDC’s market share is still on a downward trend.
Hot Take: Regulatory Uncertainty Surrounding USDC Rewards Program
The US Securities and Exchange Commission (SEC) recently filed charges against Coinbase for various securities offering violations, although the implications of its USDC reward program were not explicitly addressed. As a result, the compliance status of Coinbase’s USDC rewards program under federal securities law remains uncertain. This uncertainty poses a challenge for users and the platform itself as the regulatory landscape continues to evolve.
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